Soon, RBI to stop cash back on home loans

Soon, RBI to stop cash back on home loans

After directing banks not to offer zero per cent finance for purchase of consumer goods, the Reserve Bank of India might also crack the whip on home loan products offering cashback facility or EMI (equated monthly instalment) waiver, people familiar with the development told Business Standard.

The banking regulator is likely to review these products so see if pricing was done in a transparent manner.

The proposed move is guided by the central bank’s objective of fair and transparent pricing of loan products. RBI wants customers are made aware of their yearly borrowing cost at the time they take loans.

Soon, RBI to stop cash back on home loans

It has also directed banks that if a customer avails of a loan to purchase a product on which the manufacturer or dealer is offering discount, the lender must pass on the benefit to the borrower, without tampering with the applicable rate of interest.

Banks have also been asked to severe relations with merchants that charge fees for use of debit cards for making payments.

However, bankers have expressed concerns that these measures might hurt the retail loan demand in the current festive season.